We need to position ourselves for the comparative advantages of the future

I’ve finally finished The Industries of The Future by Alec Ross. As the name suggests it is a thorough look at what lies ahead, from the point of view of the former Senior Adviser for Innovation to Hillary Clinton when she was Secretary of State. Taking care to constantly root his observations in humanity, Ross rapidly sweeps through the roles that will be played by robotics, code, data, the Internet of Things, artificial intelligence and much more. By grounding his observations in humanity I am referring to repeated references to history, perception and anecdote.

An unfortunate many of these kinds of books end up defeated by their own techno-utopianism. Written by participants or long-time watchers, many fail to grasp the effects so much of this change will have on those currently out of the loop – without capital, connections, requisite knowledge, who live in the periphery, or are the wrong gender or race. Ross takes a global view here, and his coverage of advances in Africa, especially, was better than I had seen before. He has a remarkable point of view – growing up the child of immigrants and relatively poor, but most recently coming in contact with many leaders of countries, companies and academia. The diversity of coverage and emphasis is not perfect, obviously, but better than I’ve seen.

I’ve already touched on a lot of this book, but I want to talk a little bit about Estonia, which features prominently in the final chapters. Estonia, a country of just over a million people, has a government determined to be at the forefront of the many changes Ross notes. With such a small population, and unable to put up barriers due to its membership of the Eurozone, this makes sense. But even more, Estonia has embraced the mindset of technology. It enshrined internet access as a human right in 2000, started teaching coding in the first grade, created an “e-residency” program to become a gateway to business services, and has rapidly moved to put as many government services online as it can.

In other words, Estonia has recognised that technology will mean ever more competition. And the only way to survive an increasingly winner-take-all world, is to equip yourselves and become a first mover. Even better, technology is levelling the playing field in many areas. As these quotes attest:

“[Estonian President Toomas Hendrik] Ilves thinks that the advancement of robotics serves Estonia well by giving the small countries of the world the chance to compete on the global stage with actors like China and India. He told me ‘It will increase our functional size tremendously because people don’t have to do things the machines can do.’ Estonia has only 1.3 million citizens.”

“How does a little country like Estonia compete in the same global marketplace as China, which has a labor force a little more than 1,000 times the size of its own? It takes advantage of the fact that robots enable a relatively small workforce to produce higher levels of output than would be the case in an all-human workforce. Estonia and China will never be equal competitors by sole virtue of their difference in size, but Estonia can compete at a level far above what its size would suggest by virtue of being cutting-edge in the field of robotics as both producer and consumer.”

Fears of losing legacy businesses and mass structural unemployment have caused many countries to pause for too long, and even try to fend off progress. But the world is being upended, and as President Ilves points out, our conceptions of what makes a comparative advantage are going to change dramatically, and very soon.

Will the raw materials of the information age be base metals? How can large populations continue to provide an economic boon as cheap manufacturing is done by robots, while social welfare systems remain? Do roads matter as much as internet access as location becomes less important? What gives a nation advantage in the future is likely to be very different from what we’ve seen before. We need to position ourselves to take advantage of them.